TMI Blog2012 (12) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... e position, the provisions of section 172(7) would apply to the respondent-company that gives an option to the owners/charterers of ships to seek assessment of their income in accordance with the normal provisions of the Income-tax Act. Besides,this the Income-tax Act does not permit multiple assessments in the hands of the same taxable entity and that too in respect of income from the same business. On these facts, unable to disturb the finding recorded by the CIT(A). The order of the CIT(A) that the respondent-company is liable to be assessed on the basis of return filed u/s 139(1) for its entire income is therefore confirmed. His further order quashing the order passed by the AO u/s 172(4) is also resultantly confirmed. As held in Arabian Express Line Ltd. of United Kingdom (1994 (4) TMI 25 - GUJARAT HIGH COURT) by the very nature of assessment contemplated by section 172, it is not possible to deal with the cases covered by Double Taxation Avoidance Agreement. In the present matter the AO has rejected the claim of the respondent-company that its case falls under DTAA. Such an examination, cannot be undertaken in the proceedings u/s 172 as the AO has no discretion u/s 172 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods by sea. The principal company, i.e., freight beneficiary, is registered in UK and resident of UK. In the year under appeal, the principal company operated 40 voyages arriving at Mundra Port. The respondent-company, acting as agent of the freight beneficiary, filed voyage returns in respect of the aforesaid 45 voyages before the Assessing Officer at Gandhidham as required by section 172(3) of the Income-tax Act. Instead of passing 45 orders u/s 172(4) separately to dispose of each of the aforesaid 45 voyage returns filed by the Respondent u/s 172(3) before him, the Assessing Officer passed, for the sake of convenience, a composite order u/s 172(4) on 6.12.2010 disposing of all the 45 voyage returns filed by the Respondent-company for the assessment year under appeal as the factual matrix and the issues in all of them were identical. He has worked out taxable income in respect of each voyage covered by each return filed by the respondent-company u/s 172(3) separately in the order passed by him u/s 172(4). Perusal of assessment order shows that the AO has assessed the taxable income u/s 172(4) in respect of all the 45 voyages at Rs. 68,15,515/-, being 7.5% of total amount of freig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecourse to section 172 itself as the section applied to owner/charter only. The sub-section (1) reads as under : "172. (1) The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, main or goods shipped at a port in India" However, this sub-issue is not adjudicated since I have already held earlier that the order passed by the AO u/s 172(4) is null and void and this issue becomes academic. Further, the slot charterer not being charterer requires to be deleted, which is not required in this case, in view of the earlier finding." 5. Aggrieved by the order passed by the CIT(A), the Department is now in appeal before this Tribunal. 6. As regards the issues taken by the Department in its Grounds of appeal, the ld. CIT-DR submitted that the ld. CIT(A) has brought no foundational fact on record to support his view that the respondent-company has already filed its return of income u/s 139(1) and therefore the ld. CIT(A) was not justified in invoking the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiary in the year under appeal on the basis of the returns filed u/s 172(3) before him. The respondent-company, on the other hand, claims that the procedure outlined in section 172(4) is not applicable to it as it has already filed its return of income u/s 139(1) before the expiry of the assessment year under appeal and therefore it ought to have been assessed in respect of income from 45 voyages under the normal provisions of the I-T Act in view of the provisions of section 172(7). 9. On appeal by the assessee, the ld. CIT(A) has quashed the order passed by the AO u/s 172(4) for four principal reasons. One, the shipping business being carried on by the freight beneficiary is not occasional shipping business but regular shipping business and hence the income there-from is liable to be assessed under the normal provisions of the I-T Act and not u/s 172(4) thereof. Two, the respondent-company is filing its return of income u/s 139 and is being assessed as such in respect of income from shipping business and hence the provisions of section 172(4) are inapplicable to it. Three, the respondent-company has already filed its return of income u/s 139 at Mumbai and thus exercised its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uble Taxation Avoidance Agreements nor requires the AO to follow any elaborate procedure for making the assessment. The AO has to simply assess the income at the rate of 7.5% of the freight paid or payable to the owner or charterer of the ship or any person on his behalf. And that is the end of the matter as far as assessment of income from such ships is concerned. Sub-section (7) of section 172 confers a right on the owner or charterer of a ship to claim before the AO before the expiry of the relevant assessment year that an assessment be made of his total income in accordance with the normal provisions of the I-T Act, and if he so claims, any payment made by him u/s 172 shall be treated as payment in advance of the tax leviable for that assessment year, and the difference between the sum so paid and the amount of tax found payable by him on such assessment shall be paid by him or refunded to him, as the case may be. 11. The scheme of taxation u/s 172 has been explained by the Hon'ble jurisdictional High Court in Arabian Express Line Ltd. of United Kingdom v. Union of India as under: " It is to be noted that section 172 of the Income-tax Act occurs in Chapter XV which prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same analogy, there cannot be multiple assessments of profits from the same voyages, i.e., one u/s 172(4) on the basis of returns filed u/s 172(3) and the other under the normal provisions of the Income-tax Act on the basis of the return filed u/s 139. 13. Looking to the magnitude of the voyages undertaken by the freight beneficiary and the fact that the respondent-company has been, as observed by the ld. CIT(A), regularly filing its return of income at Mumbai and being assessed to tax at Mumbai, the finding of the CIT(A) that the freight beneficiary is not engaged in occasional shipping business but in regular shipping business and hence would be outside the scope of section 172 cannot be said to be untenable on facts and in law. His finding in this behalf is therefore confirmed. Similarly, the Department has not placed any material on record to rebut the finding recorded by the CIT(A) that the respondent-company has already filed its return of income at Mumbai. That being the position, the provisions of section 172(7) would apply to the respondent-company. Besides, as rightly observed by the CIT(A), the Income-tax Act does not permit multiple assessments in the hands of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the return filed by it u/s 139 at Mumbai. Perusal of the order passed by the CIT(A) shows that he has taken a view that the case of the respondent falls u/s 172(7) and not u/s 172(4). The respondent-company has also accepted the liability to be dealt with u/s 172(7). The jurisdictional AO may therefore verify the position and take such action as may be warranted in law in terms of section 172(7) to ensure that the income of the assessee from the aforesaid 45 voyages does not escape assessment as per the normal provisions of the I-T Act. 15. In view of the foregoing, all the 45 appeals filed by the Revenue is dismissed subject to the observations made above. CO No.21/Rjt/2012 16. Ground taken by the assessee in the cross-objection are as under : "1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in not giving any finding that the respondent Company is not the owner/charterer of the vessels, even when the respondent Company had placed before the Ld. CIT(A), certificates issued by the Assistant Director [International Taxation], Mumbai, after examining the Chartering Agreements and the Pooling Line Agreements entered by it. 2. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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